Cost of Public Cloud | Computing Service Provider

May 29, 2019 Derek DeHaan, Manager of Hosting Architecture

How much does public cloud cost?When it comes to moving to the cloud, businesses of all sizes are feeling the pressure. On one hand, the capabilities offered by the cloud are too good to ignore. If you don’t take advantage of the cloud’s flexibility and scalability—and its ability to support artificial intelligence, automation, real-time business analytics and more—you can bet that your competitors will. A Cloud Vision 2020 survey estimates that by the year 2020, 83% of the enterprise workload will be in the cloud—with almost half of that (41%) in the public cloud.

On the other hand, a move to the cloud is not to be taken lightly. The time, cost and potential risks involved in a change of this magnitude can be significant—and there are no guarantees. Many companies are hesitating, knowing they must make the jump at some point, but needing assurance that their approach will propel them into a brighter future rather than miring them in unexpected expenses and delays.

The most common question asked by potential cloud customers is, “How much does the public cloud cost?” The answer is…it depends. You’ll need to ask yourself a few other questions before you can get an answer that you can take to the bank—or to the board. Several important factors influence the cost of migration. Companies that overlook these factors can seriously sabotage their cloud migration and waste a lot of money in the process. In fact, according to the RightScale 2019 State of the Cloud Report from Flexera, cloud users today are wasting a whopping 35% of their investment.

Here are the four important questions you’ll need to answer before you’ll be able to get a solid estimate of your costs:

1. How much connectivity will you need?

Connectivity is the biggest unknown in moving to the cloud, and it can have the biggest impact on cost—potentially up to 20% of your entire monthly bill. Yet when estimating cloud workload, many companies overlook the cost of connectivity. For example, if your current workloads are in your on-premises data centers, close to your users, you don’t incur any provider connectivity fees in most cases. But if you move those applications and workloads to the cloud, those same users will now have to connect to the cloud to do their jobs, which involves connectivity fees you didn't have to account for before. Not only that, cost estimates from public cloud vendors don’t include those fees. To really know what connectivity will cost you, you’ll need to know as accurately as possible the amount of traffic that will be going to the cloud and what you’ll be charged for it. And keep in mind that unlimited connectivity can be very expensive unless you maintain continuous utilization over about 60% of the bandwidth.

2. What’s your governance model?

After your company has completed its cloud migration, if you’ve done a good job of evangelizing the new cloud strategy and trained your workforce, you may find that everyone is pretty excited about it. Although that’s a good thing, you can end up with too much of that good thing—and it can cost you. If you’re not careful, before you know it, lots of users are spinning up virtual machine (VM) instances, and things are out of control. Without governance―those important, clearly defined, well-communicated and tightly controlled cloud usage parameters―unbridled usage could amplify your costs by two or three times your original projections. Don’t let “cloud sprawl” break your budget. Check out these helpful hints for good data governance.

3. What type of software platform are you using?

Take a close look at the current makeup of your environment. Workloads that are currently running on legacy software could be exponentially more expensive to support in the cloud when compared to cloud-ready workloads. Also take into consideration the interdependencies among your applications and processes—you’ll need to decide how to split up or containerize your workloads. If you only want to move some of your workloads, be aware that you’ll incur additional connectivity fees to keep your on-premises data connected to your cloud assets. And before you make any decisions on splitting up workloads like this, be sure to test the latency between these workloads to ensure you maintain the proper user experience and connectivity of all components.

4. How certain are you about the cloud user experience?

When moving to the cloud, you’ll want your user experience to be the same as or better than it is on-premises, for the same or a lower cost. Focusing on the user experience will help ensure that your cloud migration will be a success. For example, delivering a consistent user experience across cloud and on-premises environments can streamline training and interdepartmental processes. Rather than making a massive (and expensive) cloud migration all at once, it’s better to start small with a pilot or proof of concept so you know what the experience will be.

A pilot can also help you avoid a very expensive mistake. For example, some companies have moved their workloads to the cloud, only to discover that having those workloads in the cloud was too expensive. Unfortunately, it’s even more expensive to get those workloads back out of the cloud in some cases. If your business can’t easily absorb the costs of the downtime required to shift workloads back on-premises or to another provider, you need to make sure that you not only choose the right workloads to go to the cloud, but also make sure you have identified your exit strategy from the cloud before entering it―should you need to invoke it.

The Cost of Failing to Do Your Due Diligence

Here’s a true story about one company that entered into its cloud migration without considering these factors. The company didn’t have any rules around cloud usage, its server allocation wasn’t designed to meet its needs, and connectivity costs weren’t even on its radar. Within one month, the company’s anticipated monthly cost projection skyrocketed from $60,000 to $150,000. The company wanted to pull its data back out of the cloud but learned it would cost another $180,000 to $200,000 to do that. Luckily, OneNeck was  able to help the company optimize its cloud usage and brought its costs down to around $75,000 monthly. That was a painful and roundabout way to get to cloud optimization.

How do you make sure you have the right answers to these four questions before you move to the cloud? As part of our discovery and design sessions, we do very thorough due diligence based on these four factors, to make sure that you have the best estimate of your ongoing public cloud costs.

Moving to the cloud can be a great thing for your business, and it doesn’t have to break the bank. Just make sure you’ve asked all the right questions ahead of time.

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